In Deal Making, Broaden Your Focus

By — on / Business Negotiations

Adapted from “Negotiators: When Overwhelmed by Choices, Find Order in Chaos,” first published in the Negotiation newsletter, September 2012.

Imagine that you are in charge of renting a new location for a branch of your company in a nearby city. After researching the reputations of a number of local real estate agents, you meet with several and choose the one who seems most knowledgable and responsive.

Based on your request to review as many options as possible, the agent sends you dozens of listings through an online program. As you click through the possibilities, you find yourself quickly overwhelmed; however, you continue looking through the listings, accepting or rejecting each one in turn because you know you are responsible for choosing the best property for your company in negotiating for a favorable lease.

Professionals are often faced with the task of sorting through a variety of choices before, during, or after a negotiation. A hiring manager may need to sift through hundreds of resumes in order to choose the most promising candidates to interview for a position. A salesperson might present a procurement officer with a number of different proposals to evaluate. An engaged couple might embark on an exhaustive (and exhausting) search for the perfect venue for their wedding.

Having a plethora of options to choose from can be a blessing, as it gives us the opportunity to pick the cream of the crop. Yet the task of judging an array of choices complicates decision-making. In fact, the more choices we face, in negotiation and in other contexts, the worse the quality  of our decisions, research psychologists have found.

In a new study in the journal of Psychological Science, University of Pennsylvania professor Uri Simonsohn and Harvard Business School professor Francesca Gino looked at the phenomenon of choice bracketing, or the common tendency to automatically group a large number of choices into sets.

They examined data from more than 9,000 interviews of MBA applicants to an American business school conducted by 31 interviewers. The interviewers, who held 4.5 interviews per day, on average, from 2000 to 2009, rated applicants on five measures:

  • Their communication skills
  • How driven they seemed
  • Their ability to work in teams
  • Their level of accomplishment
  • And their interest in school

The interviewers also made an overall evaluation of each applicant on a scale of 1 to 5.

The researchers theorized that the interviewers, whether unconsciously or not, would group each day’s applicants into a subset, thus creating a narrow bracket of four to five interviews. Given that people overestimate the degree to which small samples resemble the whole, Simonsohn and Gino through interviewers would expect that their average daily score should roughly match their average annual score for the entire pool of applicants. For example, if an interviewer expected to give that year’s applicants an average score of 3, then he might be reluctant to end up with a much higher or lower average score (say, a 1.5 or a 4.5) for the four to five people he interviewed on a given day on the assumption that he was veering too far off course from his annual average.

Indeed, the researchers found that interviewers’ daily averaged scores were more uniform than could be expect by chance, thus suggesting that narrow bracketing artificially influenced interviewers’ ratings of individual applicants. In other words, interviewers may have modified their opinions of individual applicants to achieve an arbitrary goal.

As these research findings suggest, distortions created by narrow bracketing can bias our judgments in negotiation and other situations. Take the case of a judge who makes dozens of rulings each day. If she judges against three defendants in a row, she might be reluctant to rule against the next one, for fear she is being too harsh. In fact, people tend to underestimate the prevalence of this type of random “streak” in their decision making, and the judge would be wise to ignore it.

Keep the principles of choice bracketing in mind when you are preparing to present options to a negotiating counterpart. Rather than giving a potential customer a catalog filled with hundreds of options, meet with him to find out in detail what he is looking for, then customize several proposals (three is a good number) and go over them with him. If he isn’t sold on any of the proposals, try to find out what combination of options he likes best. Then go back to the drawing board and craft a few more new proposals that will better meet his needs. We offer more techniques to help you and your counterpart avoid being overwhelmed by complex decisions in the September 2012 issue of the Negotiation newsletter.

Resource: “Daily Horizons: Evidence of Narrow Bracketing in Judgment from 10 Years of MBA-admission Interviews,” by Uri Simonsohn and Francesca Gino. Psychological Science, in press.

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